SOFTWARE FOR SITE SELECTIVITY
Byline: Andree Conrad
NEW YORK — Putting stores in the proper locations is critical to all retailers, but perhaps even more so for Diesel USA. The company sells upscale jeans to a narrow demographic and must avoid competing with its department store partners.
Examining existing store locations, Andreas Kurz, Diesel USA’s president and chief executive officer since January, saw they were in the kinds of places he likes — near destination sites in major metropolitan areas, such as Harvard and MIT in Boston and opposite Bloomingdale’s in New York.
The problem was finding new locations quickly.
Kurz is using site-selection software that enables him to search a database for locations, taking into consideration existing Diesel stores and competitors such as Versace, Helmut Lang and Prada, as well as Diesel’s department store and large specialty store customers, such as Neiman Marcus and Saks Fifth Avenue.
The first Diesel store plotted in this manner opened in mid-August and already appears to be beating company averages on full-price sell-through. “What being in the right market does is maximize the effects of improvements in deliveries of new product,” Kurz said, referring to the parent company’s aggressive plan to deliver eight new collections a year. “Our sell-through is now around 65 percent — not yet where we want it to be, but much better than it was.”
Diesel USA is a division of Diesel SpA, Molvena, Italy, which makes and sells jeans that retail for $100 and up. The U.S. market niche is small — Kurz estimates it to be between 750,000 to 1.5 million pairs a year — and its jeans are meant to appeal to upscale, brand-averse young consumers defined by Diesel as “affluent urban-edgy.”
Diesel is looking to open six more locations next year, 10 in 2002, another 10 in 2003 and seven sites in 2004. Each new store is expected to generate between $1.9 and $3 million in annual sales. Key to the strategy is knowing exactly where the “affluent, urban-edgy” customers live and shop.
The store that opened mid-August is in the South Coast Plaza, Costa Mesa, Calif. “The demographics of the area were ideal for a Diesel store,” said Kurz. “Income levels showed nothing below $50,000, some $70,000, a big chunk of $100,000-plus and quite a few with income in the millions. The software will show you this within a three-, five- and 10-mile radius.”
Palm Springs may offer these demographics and even higher ones, but retirees have a penchant for double knit, not distress-finished, ring-spun denim. The technology highlighted more about Costa Mesa than just income: The area’s largest populations, grouped by age, are 25-to-34-year-olds, followed by 18-to24-year-olds — all potential Diesel customers.
Continuing to refine Diesel’s ability to interpret demographic databases, Kurz said that the company is using the site-selection software to perform “geo-coding,” the science of zooming in on a single street and knowing what’s going on among its residents demographically. “We plan to base our expansion on what are the areas with the highest potential out there and where we have not covered enough ground yet,” Kurz said.
The site-selection software is from National Decision Systems, while the shopping center database is from National Research Bureau, both part of VNU-MI, based here. The mapping information software is from Microsoft, Redmond, Wash.